Blockchain Will Improve Gaming – Five Ways To That Win

Gaming and blockchain are rarely said together in the same breath. There is obvious synergy given the potential role of digital currencies, but the opportunities for gaming developers are broad and compelling. We created a company, Blockchain Studios, precisely because we thought the application of blockchain technologies would unleash fresh creativity and ideas in gaming. There are five compelling reasons why the gaming industry should follow suit.

True item ownership (Non-Fungible Tokens)

Blockchain offers a way for digital assets to be owned and traded in the same way that items can be bought and sold in the physical world. Ownership is irrevocable, which finally puts the gamer in control of the assets they have bought and curated.

These assets are called non-fungible tokens (NFTs) – pieces of digital content that are unique, exist as a fixed number and can be bought and traded. The tokens themselves can take many forms, depending on what system they exist in. In gaming, for example, they could translate as in-game items. In this context, a blockchain can serve as a decentralised and immutable ledger that maintains ownership of NFTs, rather than a cryptocurrency. The most widely used NFT is the ERC721 standard, developed on the Ethereum blockchain.

Using NFTs ensures that the player rather than the game developer owns their virtual item. This guarantees the rarity of that object and ensures the object is unique and non-duplicable – introducing a new concept of digital scarcity.

Increased security and transparency

The next advantage we have with blockchain is security. By using NFTs to secure items in-game, we can create solutions to forms of fraud like item duping. Fraudsters have often found exploits within games that allow them to duplicate what were originally rare and expensive items increases inflation while diluting item value. When all game assets are tied to the blockchain, this kind of activity will be impossible.

The technology also allows developers to tackle the issue of identity fraud in gaming, and the ways in which criminals can use stolen credit cards to purchase in-game items that can sell on with impunity. When items are tied to individual player’s accounts, with immutable records encapsulating their entire history, it becomes easy to identify the small number of players working to undermine the system and isolate the methods they use.

Regulating in-game economies

Cracking down on something like item duplication contributes to solving another persistent issue – creating real item scarcity. No matter how meticulously developers set up in-game features like progression, balance and item rarity, there are always people circumventing the rules. Blockchain, through proof of ownership for all existing assets or items, can fix these problems.

By acting as the official ledger of an in-game economy, storing information about each transactions on every item, from its creation to destruction, blockchain gives a powerful guarantee to each gamer. Not all stats and equipment will be made equal or identical – in-game assets will be finite and desirable.

Reduced sunk cost

Blockchain technology could even go some way to eliminate the sunk cost problem that players face when they stop playing a game. Any items they own can be sold on in a way that allows them to recoup some value from NFTs that they will no longer use, which is particularly useful to those players who have obtained some rare or irrefutably unique item or gear. This demonstrates how the potential for collectibles goes beyond simple trading – users will increasingly look to manipulate, develop or play with their purchases.

We are also developing scenarios that will allow gamers using CryptoCarz to rent using smart contracts – either borrowing a car or even creating your own racing team and drawing rental income from others. The gaming industry will be profoundly altered by digital assets that are unique, programmable and unequivocally owned by the user. This change will not only alter the way established systems work, but also provide the platform for new game formats to emerge, and for older formats to reinvigorate their games and player base.

Transforming player-to-player dynamics

Beyond the utility of in-game and game marketplace applications, there is potential for the blockchain to transform relations between gamers. Gamers will be able to sell in-game items directly, without an intermediary. They will be able to use smart contracts to set up their leagues and generate review of their own. One option we’re developing for CryptoCarz will be a Fast and Furious model that will allow two racers to race for the other driver’s car.

The innovation brought by digital scarcity has a real possibility of changing the gaming industry – specifically by giving new power – and options – for gamers. Using NFTs, every character or context in a computer game will become a digital asset. New incentive models for gamers and game developers, through NFTs, means that the link between gaming and blockchain is not a side-note or an afterthought, but a profound shift in technology that is already underway.